The Union government has set a deadline of 18 months to complete the planned merger and listing of three state-run insurance companies: National Insurance, United India Insurance and Oriental Insurance.
“The merger of all the three insurance companies is on the top of the priority list. We have done much discussion on it in over the last few days. As per the internal estimate, we expect the whole process to be completed in the next 18 months,” a senior official in the finance ministry told this publication.
The merger of the insurance companies was long on the cards of the NDA government, with officials seeing it as a way to improve their financial health. Former finance minister Arun Jaitley, for instance, had already announced in his budget speech this February that National Insurance, United India Insurance and Oriental Insurance would be merged and listed. The government had also appointed E&Y as a consultant to see through the completion of the merger process.
Meanwhile, last month, the government asked the management of all three companies to give internal assessment reports by the end of June so that the process could be initiated on a priority basis. “The department, along with E&Y, is already working on streamlining the process. However, before initiating it, we want an internal assessment report from the management by June-end,” a senior official from the department of investment and public asset management (DIPAM) said.
DIPAM had met earlier to discuss the future course for these insurance companies. Initially, DIPAM was aiming to complete the process by the end of the next quarter. But, that has now been changed to 18 months. There were also reports that the government was looking to take the acquisition route in the case of these public sector general insurance companies. The officials are currently not ruling out this route, but say that the final call will come only after the submission of internal assessment report from these three companies.
“Apart from the financial status and roadmap, the internal assessment report will also include the rationalisation of manpower and branches, updated valuation of assets among others,” the official added. The move will not only help the government in raising funds for its disinvestment corpus, but will also help in realising the government’s overall strategy of consolidation in the public enterprises’ space.